The fiscal implications of the bill cannot be determined because the number of gas sales contracts, weather emergencies resulting in force majeure notices, force majeure notices received by purchasers, complaints or reports to be received under provisions of the bill, and offenses determined to have occurred as well as the amounts of penalties ultimately assessed are unknown.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The bill would amend the Natural Resources Code to specify that a confidentiality provision between the owner or operator of a pipeline and a shipper for the sale, transportation, or gathering of natural gas that is entered on or after September 1, 2023, may not be required unless this provision is requested in writing by one of the parties prior to execution of the contract. The bill would also specify that a confidentiality provision in a contract that was entered into before this date becomes unenforceable upon expiration of the contract unless continuation is requested in writing.
The bill would amend Subchapter C of Chapter 86 of the Natural Resources Code to add Section 86.045 relating to the investigation of use of force majeure. The bill would permit a purchaser of natural gas to report to the Railroad Commission (RRC) instances in which they receive notice of force majeure during a weather emergency and reasonably believe that the person sold the natural gas that would have otherwise been available to the purchaser to a different purchaser at a higher price. The bill would permit the RRC to investigate these reports to determine whether the person providing the natural gas service made the sale in a way that violates state law. Upon determining that a sale violated state law, the bill would permit RRC to notify the Office of the Attorney General (OAG) which may then initiate a suit to recover penalties authorized by law.
Based upon information provided by the RRC, this analysis assumes that costs to the agency and the need for additional FTEs could potentially be significant depending upon the number of complaints or reports received under Section 86.045. The RRC assumes that the volume of reports received would be large given the volume of gas being produced and sold in the state and anticipates that the resulting investigations could be complex. Additional staff would be necessary to review financial and other supporting documents; conduct investigations into private party activities, contract law, and weather phenomena; develop evidence and cases; prepare legal documents; hear or support cases arising from investigations; and coordinate with other agency divisions and the OAG as necessary.
Based on information provided by the OAG, costs related to any legal work resulting from the bill could be absorbed with existing resources.
The fiscal impact to the state cannot be determined because the number of gas sales contracts, the number of weather emergencies and any resulting force majeure notices, and the number of reports received, and investigations initiated cannot be estimated. Additionally, the Comptroller of Public Accounts anticipates that civil penalties could increase as a result of the bill; however, the fiscal impact cannot be determined because the number of offenses and amounts of penalties that would be assessed are unknown.
No significant fiscal implication to units of local government is anticipated.